Peroxisomes are ubiquitous organelles in eucaryotic cells, where they play essential roles in cell respiration and lipid metabolism. The functional importance of peroxisomes is emphasized by the existence of several human peroxisomal disorders. The most severe of these, Zellweger's, syndrome, is characterized by an absence of functional peroxisomes; this disease is fatal. Peroxisomes contain enzymes involved in the beta-oxidation pathway, which is responsible for the breakdown of fatty acids. An important feature of peroxisome biology is the fact that the number and size of this organelle varies in response to pharmacological and physiological stimuli. In rodents, hepatic peroxisomes are induced by high levels of fatty acids as well as by a variety of compounds important to medicine, agriculture and industry. In addition to causing peroxisome proliferation, these compounds also cause liver cell tumors. Despite extensive investigations, the precise mechanisms of the hepatocarcinogenic action of peroxisome proliferators has not been elucidated. Peroxisome proliferation is accompanied by a transcriptionally regulated increase in the activity of many peroxisomal proteins. We have recently identified two proteins, Oaf1p and Oaf2p, which are essential for the induction of peroxisomal proteins in the yeast Saccharomyces cerevisiae. This proposal is based on the hypothesis that fatty acid-induced peroxisome proliferation is regulated by a specific set of proteins, which are organized into a novel signal transduction pathway, of which Oaf1p and Oaf2p are key components. Regulation of these transcription factors plays a pivotal role in determining the levels of peroxisomal proteins and in regulating these levels in response to external stimuli. We will test this hypothesis by characterizing the manner in which Oaf1p and Oaf2p are regulated, and by identifying factors which act upstream of these transcription factors. In addition, we will determine the global role of these proteins by examining the expression of peroxisomal matrix and membrane proteins, and of proteins involved in peroxisome biogenesis, in strains in which the OAF1 and OAF2 genes are disrupted. By these means we will elucidate the mechanisms which lead to peroxisome proliferation. This work should lead to an understanding of the links between gene activation, peroxisome proliferation and tumor formation.